A Point of View about The Future
Gary Hamel on the primacy of strategy
© 2003 by Michael Finley
Copyright (c) 1995 by Michael Finley
Over the past decade, Gary Hamel, along with fellow researcher C.K. Prahalad, has quietly built a reputation as one of the world's most penetrating voices on the practice of corporate strategy. Some of the ideas in this piece are taken from his book Competing for the Future (Harvard Business School Press, Fall 1994).
Is there a
competitiveness crisis?
Hamel notes that the 1992 presidential elections were in part based on the general sense many of us have, and that the Clinton campaign exploited, that America stands at the brink of economic annihilation at the hands of Europe and the Pacific Rim countries. But is that apprehension justified?
Yes, and no, according to Hamel. It's true there is a large trade imbalance between the U.S. and Japan -- $140 billion in 1993. But while Japan ships us polished products like cars, computers, semiconductors, and toys, our top exports to them sound more like the products of a colony -- logs, meat, and steel.
At the same time, Japan has a parallel deficit of inward foreign direct investment. And Japan has problems all its own these days: record numbers of bankruptcies, a faltering Nikkei, its biggest companies wondering out loud how to get rid of their "lifelong employees." Their manufacturing productivity numbers are superior to ours, but productivity in other sectors falls way behind -- the average Japanese cattle ranch has two head!
As for Europe, Hamel pointed to a host of measures in which Europe comes up a sorry third -- weak job creation, low sales per employee, low worker productivity, and enormously expensive labor and social programs.
Bottom line: U.S. companies show numerous signs of needing a major makeover -- but our competitors abroad are not superhuman. With the right strategy and proper execution, American companies have as good a chance to capture future markets and opportunities as anyone.
So what's
the problem?
If Japan and Europe aren't the enemy, who is? We are.
Think about it, Hamel says. The large companies having conspicuous problems -- IBM, CBS, Sears, our distressed banks and airlines -- is Japanese competition the cause of their difficulties?
No. The problem with these mature, traditional companies is that they are experiencing nontraditional competition by other American companies, upstarts that came in from left field, like Microsoft, CNN, Wal-Mart, nonbank banks and smaller, friskier airlines.
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